Penalty under Section 271(1)(c) deleted as AO failed to establish concealment or inaccurate particulars

The ITAT Surat held that penalty u/s 271(1)(c) cannot be imposed without a definite finding of concealment by the AO. The assessee filed return in response to notice u/s 147 and genuinely believed the income was not assessable. The AO accepted the returned income without finding concealment or inaccurate particulars. Following CIT v. K.R. Chinni Krishna Chetty, the tribunal emphasized that penalty requires specific finding of concealment, which was absent. The penalty was deleted in favor of the assessee.

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Issues involved:
The appeal challenges the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2013-14.

Summary:

Issue 1: Assessment and Penalty Proceedings
The appeal concerns the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act, based on the concealment of income amounting to Rs. 3,67,500. The penalty proceedings were initiated after the return of income was filed in response to notice u/s 148 for AY 2013-14. The Assessing Officer issued a notice u/s 271(1)(c) on 19.12.2018, which the assessee did not respond to. Subsequently, a show cause notice was sent on 02.04.2019, to which the assessee also did not reply. The Assessing Officer held that the assessee concealed income by not filing the return, leading to the penalty imposition.

Issue 2: Appellate Arguments
The appellant argued that the assessee voluntarily disclosed business income and paid taxes, presenting a bona fide explanation. Referring to a similar case, it was highlighted that if the Assessing Officer merely accepts the returned income, the penalty under section 271(1)(c) is not applicable. The appellant also cited a judgment by the Hon'ble Supreme Court to support their case.

Issue 3: Tribunal Decision
The Tribunal noted that the Assessing Officer did not find any concealment of income in the assessment order but accepted the returned income filed by the assessee. Referring to previous decisions, including one by the Co-ordinate Bench of ITAT Delhi, it was concluded that without a definite finding of concealment, the penalty under section 271(1)(c) cannot be imposed. Therefore, based on the facts and legal precedents, the Tribunal deleted the penalty imposed by the Assessing Officer.

Conclusion:
The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty imposed under section 271(1)(c) of the Act. The decision was based on the lack of evidence of concealment of income and the legal precedents supporting the appellant's case.

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